No, once you have signed a guarantor loan agreement to become a guarantor and the loan comes through, you cannot stop being the main borrower’s guarantor.
There can however be a two-week period after the loan has been sent to your, the guarantor’s, account, where you can take the time to think about whether you want to send the loan to the main borrower or send it back to the lender.
Aside from this period, once you have agreed to the loan you can no longer opt out of your guarantor status.
Can I Cancel a Guarantor Agreement?
No, as previously mentioned, you cannot cancel a guarantor agreement. The only time where this may be an option is when the lender gives the guarantor two weeks to decide whether to send the loan money to the main borrower or decide against this and send it back to the lender.
Aside from this, the only way you can get out of a loan agreement is to get the borrower to pay the loan off early or to pay the loan off early yourself. It’s worth noting that paying the loan off early may come with additional fees.
Can You Change Guarantors?
No, you cannot change the guarantor on a loan agreement. This is because guarantors are individually checked for their eligibility for a loan, and therefore can make up a big reason as to why the loan was accepted in the first place.
Once the loan agreement is signed and the loan has gone through, a guarantor is contractually obligated to stay as such throughout the entire term of the loan.
If a guarantor dies, their spouse may become liable for loan payments, however this is not always the case, and will depend upon the unique circumstances of such an unfortunate situation. In the event of a guarantor’s death, the lender may have claim to recover their debts with the deceased’s estate or property.
Is Being a Guarantor Legally Binding?
Yes, once you have signed a loan agreement agreeing to be a guarantor, this is a legally binding document. This means you are legally obligated to meet the loan agreement’s terms and conditions, including paying for the loan if the main borrower fails to.
Becoming a guarantor is a big financial commitment. It’s important to carefully consider becoming a guarantor before signing a loan agreement, making sure that you can comfortably afford the repayments should the main borrower default, and that you’re also prepared to pay for this.
It’s also important to only become a guarantor in the following circumstances:
- You trust the main borrower can keep up with repayments
- You know you can comfortably afford repayments
- You plan to be in contact with the main borrower long-term
What Rights Do I Have as a Guarantor?
While you may not be able to stop being a guarantor, you do have certain rights to help make the loan agreement more manageable in certain situations.
As a guarantor, you can have control of the money. Once the loan is approved, the money will be sent to the guarantor rather than the main borrower. After this, as the guarantor you can then have a two week period to assess the situation, and consider whether you really want to send this money to the main borrower or not. If you decide against sending the money to the main borrower, you’ll then have to send it back to the lender.
Having control of the money at the start also puts guarantors in a great position if they do want to continue with the loan, however want to ensure the money only goes out to the main borrower in stages. As the money is sent to the guarantor’s account, they can decide how much money then goes out to the main borrower at certain stages, helping them to manage their finances and the loan at a comfortable pace.